Your largest equity buy in the last three months is...(long term buys mostly)

[coc]

3 hours ago, dealraker said:

The two were not much alike.  Old Dominion and Progressive were by far the two largest in the IRA.

Oh, thanks - sorry did delete my post as I saw you answered above. Thanks!

[coffeecaninvestor]

Started buying JNJ this week up to a 4% position now, and will likely buy more. Figured a 3% dividend that is growing is better than holding cash in a sweep account with interest rates about to be cut. Wanted something with less downside risk than the S&P500. 

[SafetyinNumbers]

3 hours ago, coffeecaninvestor said:

Started buying JNJ this week up to a 4% position now, and will likely buy more. Figured a 3% dividend that is growing is better than holding cash in a sweep account with interest rates about to be cut. Wanted something with less downside risk than the S&P500. 

Fair to say you own FFH already? On a look through basis, it’s hard to beat its float to market cap ratio.

[coffeecaninvestor]

24 minutes ago, SafetyinNumbers said:

Fair to say you own FFH already? On a look through basis, it’s hard to beat its float to market cap ratio.

I don't currently. I haven't spent the time to really dig into the business other than reading the thread. It's on my to due list. FFH may be cheap, but it seems to be more volatile, and that is what I am aiming to avoid. I want some upside and limited downside until I can find a fat pitch. Sounds good in theory for now at least. 

[SafetyinNumbers]

11 minutes ago, coffeecaninvestor said:

I don't currently. I haven't spent the time to really dig into the business other than reading the thread. It's on my to due list. FFH may be cheap, but it seems to be more volatile, and that is what I am aiming to avoid. I want some upside and limited downside until I can find a fat pitch. Sounds good in theory for now at least. 

FFH has a volatile ROE but I think the risk is now more to the upside than the downside given the solid investment income. Run rate for investment income is >$100/sh on a pre-tax basis. As a result, it’s hard for ROE to fall below 10% on a FTM period. It’s a 40% position for me so I obviously think it’s a fat pitch. The surprising part is how few people can see it.

[cubsfan]

On 9/2/2024 at 8:14 PM, Gregmal said:

Couple things. It’s not expensive, at all, and it’s basically a duopoly. I also have a friend who was basically as high up on the food chain of the other pest control company as you can get who has hammered into my head that “pest control is a hell of a business”. Third, merger integration is always a timing gamble, but eventually someone fixes it in instances like this. 
 

So it was a number of things, coming together, at a time when everyone tried convincing themselves 5% CDs were better alternatives than equities at 20-25x, and I just couldn’t see how ROL could be such a great biz at 40x but RTO wasn’t worth 15x, and that’s kinda the gist. If it lingers at the current valuation long enough it will be taken out; almost with certainty. 

 

This really is a great business with high returns. Need to have the stomach for roll ups, as much of the growth is acquisitions. Reminds me of Waste Management in the 80's & 90's. RTO is a scale business, so if they can integrate these acquisitions, it works well. Terminix was big and once digested, we likely get back to historic returns. After all this is the largest pest control business in the world - with demand growing steadily. Because of scale/route density/advertising/technology, etc - it's very difficult for small players to compete.

 

The real gem is in the institutional business, where the service is much less price sensitive and much more quality is demanded, as public health is involved with associated liability and business reputation risk at stake.

 

Like the garbage business - kind of a nasty boring business that is vitally important and very profitable.

[Gregmal]

51 minutes ago, cubsfan said:

 

This really is a great business with high returns. Need to have the stomach for roll ups, as much of the growth is acquisitions. Reminds me of Waste Management in the 80's & 90's. RTO is a scale business, so if they can integrate these acquisitions, it works well. Terminix was big and once digested, we likely get back to historic returns. After all this is the largest pest control business in the world - with demand growing steadily. Because of scale/route density/advertising/technology, etc - it's very difficult for small players to compete.

 

The real gem is in the institutional business, where the service is much less price sensitive and much more quality is demanded, as public health is involved with associated liability and business reputation risk at stake.

 

Like the garbage business - kind of a nasty boring business that is vitally important and very profitable.

Yea the valuation is rather stupid to me. The balance sheet is great. Profitability is unquestionable. Just really a matter of when with the Terminex integration. No shortage of acquirers for it as well. Just seems like a case where people are short term and impatient. 

[Cod Liver Oil]

Yes!!!!! RTO is a classic Peter Lynch dirty business involving rodents, insects, poison and waste tied together with a subscription bow.  I enjoy owning RTO and Dior together: beauty and the beast. I think the beast will best the beauty over the next year or two because pestilence never goes out of style.

 

Edited September 17 by Cod Liver Oil

[73 Reds]

22 minutes ago, Gregmal said:

Yea the valuation is rather stupid to me. The balance sheet is great. Profitability is unquestionable. Just really a matter of when with the Terminex integration. No shortage of acquirers for it as well. Just seems like a case where people are short term and impatient. 

Is debt the issue or is it something else?  I haven't been following this; why would activist investors want to push out American management of an American subsidiary?

[Gregmal]

27 minutes ago, 73 Reds said:

Is debt the issue or is it something else?  I haven't been following this; why would activist investors want to push out American management of an American subsidiary?

No idea. Net debt to EV is of zero concern to me here. 

[coffeecaninvestor]

Well that was quick back to fully invested. Since we are pretty good savers I don’t see the need to hold a ton of cash. 3 of the largest in dollar terms stock purchases I have  made JNJ, NSRGY, and RTO. Wake me up in 3-5 years, or if the market crashes. If RTO pans out it’s probably pretty close to a never sell. JNJ and NSRGY are more of a place to put cash for the time being. 

[Gregmal]

1 hour ago, coffeecaninvestor said:

Well that was quick back to fully invested. Since we are pretty good savers I don’t see the need to hold a ton of cash. 3 of the largest in dollar terms stock purchases I have  made JNJ, NSRGY, and RTO. Wake me up in 3-5 years, or if the market crashes. If RTO pans out it’s probably pretty close to a never sell. JNJ and NSRGY are more of a place to put cash for the time being. 

Think JNJ suffer from lack of sales to Diddy? Lol

[coffeecaninvestor]

8 hours ago, Gregmal said:

Think JNJ suffer from lack of sales to Diddy? Lol

Haha I’ll be sure to ask on next quarters CC.. man did he fuck up its disgusting. Dude could have literally anything and he just destroyed his life. 

[Milu]

10 hours ago, coffeecaninvestor said:

Well that was quick back to fully invested. Since we are pretty good savers I don’t see the need to hold a ton of cash. 3 of the largest in dollar terms stock purchases I have  made JNJ, NSRGY, and RTO. Wake me up in 3-5 years, or if the market crashes. If RTO pans out it’s probably pretty close to a never sell. JNJ and NSRGY are more of a place to put cash for the time being. 

Just taking a quick look at Rentokil's financials, earnings and cashflow history and growth looks good. My main concerns look to be around low returns on capital and seems to be a lot of dilution over last couple of years. Perhaps these two are related.

[coffeecaninvestor]

23 minutes ago, Milu said:

Just taking a quick look at Rentokil's financials, earnings and cashflow history and growth looks good. My main concerns look to be around low returns on capital and seems to be a lot of dilution over last couple of years. Perhaps these two are related.

They used  part stock to buy Teminex which was a large acquisition which is why there was dilution. They make a ton of smaller acquisitions every year which distorts ROIC/ROE calculations. 

 

Looking at how high and stable gross and operation margins are and its pretty clear it is a good business. You figure they would compete on price given the consolidated industry and  margins would come down over time but they haven't. They also don't require much in terms of capex, or working capital which is great because they can use that for M&A, buy-backs, dividends, and deleveraging. 

[gfp]

Anecdotally, it would seem to me like the Terminix business would benefit from the US market for existing home re-sales becoming less frozen, more active. Home inspections are a big driver of Terminix sales where I live. In my market there are only two companies with the tents to fumigate for dry wood termites. Terminix and House Call. Everyone else subcontracts to one of those two. 

[mjm]

16 minutes ago, gfp said:

Anecdotally, it would seem to me like the Terminix business would benefit from the US market for existing home re-sales becoming less frozen, more active. Home inspections are a big driver of Terminix sales where I live. In my market there are only two companies with the tents to fumigate for dry wood termites. Terminix and House Call. Everyone else subcontracts to one of those two. 

this is the treatment using cyanide gas?

[gfp]

3 minutes ago, mjm said:

this is the treatment using cyanide gas?

 

they call it sulfuryl fluoride I think.  

[tnathan]

Biggest 2 purchases for me were a couple banks - HIFS and UNIB. Both are extremely well positioned as rates are cut further

[coffeecaninvestor]

3 hours ago, tnathan said:

Biggest 2 purchases for me were a couple banks - HIFS and UNIB. Both are extremely well positioned as rates are cut further

I've owned HIFS and BAC in the past. Kind of kicking myself for not buying some HIFS when it was trading below BV. Although with all the regulations, and crazy stuff that has gone on in the banking industry I have kind of moved banking into the too hard pile. 

[tnathan]

15 hours ago, coffeecaninvestor said:

I've owned HIFS and BAC in the past. Kind of kicking myself for not buying some HIFS when it was trading below BV. Although with all the regulations, and crazy stuff that has gone on in the banking industry I have kind of moved banking into the too hard pile. 

Per the Fed, terminal rates are not going to be as low as they were previously, but I still think HIFS grows book value ~10-15% per year and will trade up to 1.5x+ of TBV/share as rates fall so there's still plenty of room to run. When the mortgage business picks back up UNIB will truly be a monster their CEO is really sharp

[Gregmal]

Per common sense, they were never going to be 5%+ long term either, its just some people couldn't get away from the conspiracy theorists on X(formerly known as Twitter) and missed a very obvious and easy to put on trade.

[coffeecaninvestor]

I think the one thing that held me back on HIFS was the fact they have expanded operations to other cities. I agree they are good underwriters, but I wasn't too sure how these new loans would perform. I read all their letters back as far as they go, and I agree mgmt has done a great job here. 

[UK]

With some risk of emergence of a few additional cockroaches I bought a position in RTO recently. Not full size yet, but big enough to qualify for a second large buy this year after ERF. I like this business enough to risk it sooner or later to prevail over perhaps not so perfect managment and missing an owner operator, as in ROL or ERF cases. Incidentaly these are simillar somewhat (service business, benefiting from scale) and were moving quite to the different direction from the market in the last few years, but for different reasons (covid hangover and overpriced acquisition). Talk about expensive market at ATH and not finding what to do...of course a not so trivial question of being right still remains to be answered:)

 

Edited October 16 by UK

[Dinar]

Airbus